Put Your Money Where Your Mouthpiece Is

Put Your Money Where Your Mouthpiece Is

Companies spend a lot of money to acquire new customers. Poor service is the fastest way to lose them. Is your company's call centre doing everything it can to keep its customers happy?

Picture this: Nearly all your customers are assembled in one giant arena. They've come because they want to buy something. Or they've got a question about how your product works - or a complaint about how it doesn't. Who should address such an important gathering? The VP of sales, perhaps. Maybe the CEO.

Stop imagining. This get-together takes place every day in your call centre, which handles more than 95 per cent of all your company's electronic customer interactions. Yet the people manning the front lines of your company - those who represent your voice to the world - are among the lowest paid, most disaffected employees in your organisation. Often, these are entry-level workers pressured to keep talk times low and sales volumes high while dealing with angry customers and results-oriented managers. On average they earn $32,000 a year, and most leave - burned out - after 18 months.

But companies ignore the importance of their call centres at their peril. Gartner estimates it costs four to 10 times as much to capture a new customer as it does to provide good service to an existing customer. A whopping 68 per cent of customers who defect do so because of poor service.

Such alarming statistics - and the swelling chant of CRM mantras in boardrooms - mean that the once-lowly call centre is beginning to glow more brightly on the CEO's radar screen. Companies striving to transform themselves into customer-centric organisations are re-examining their front lines. Call centre agents, after all, actually talk to customers every day. What if those same agents could be trained to up-sell and cross-sell instead of merely dealing with complaints and taking orders?

But as call centres become more strategic, they're becoming more complex and harder to manage. Asking agents to handle customer contacts from multiple channels, relying on more technology and placing greater demands on agents will create challenges that your company must address in order to keep customers happy and profits rising.

The Multichannel Challenge

Today's customers are electronically savvy, and they expect to be able to use any channel they please to contact companies. If you don't offer e-mail, Web self-service and live text chat, you may be missing opportunities to connect with your customers. But morphing a traditional call centre into a contact centre capable of handling these new channels is difficult on two fronts. First, companies face the daunting technical challenge of customer relationship management (CRM): integrating information collected through all of the channels to give contact centre agents an updated, 360-degree view of each customer, no matter which channel the customer uses - or used yesterday, for that matter. "The biggest challenge is how to adequately integrate all the different ways your customer can communicate with you - and do it in such a way as to not create silos," says Tom Crotty, a general partner at Massachusetts-based Battery Ventures. If the agent on the phone doesn't know that the customer has already e-mailed detailed product specs to the company, the customer will be justifiably annoyed - and more likely to take her business elsewhere. Crotty thinks most companies have a long way to go to achieve channel integration. "We're in the top of the first inning of a nine-inning ball game," he says.

A multichannel contact centre also fundamentally changes the nature of the agent's job. Reps hired for their ability to finesse customers with their dulcet tones are now expected to coherently and correctly answer e-mails and correspond in text chat in realtime. Some companies have begun retraining their existing staff; others hire writers to handle e-mail and chat. Either way, companies must make sure agents understand that unlike ephemeral phone conversations, text-based messages live forever. "It can be a real problem if you have people making promises in e-mail and chat; you have to live by it," says Brad Cleveland, president of Incoming Calls Management Institute (ICMI) in Maryland. "The legal liability is pretty significant."

Automation Without Alienation

Automation in the call centre has its uses. Some customers welcome the ability to find answers to their own questions, either through self-service on the Web or by using interactive voice response (IVR) units. These self-service technologies also significantly lower the costs of customer interactions (see "The Costs of Customer Service", above). As alluring as those savings may be, companies need to make sure automation helps rather than hinders customers.

For instance, mortgage applicants tend to want human contact, says Colleen Amuso, a research director in the CRM practice at Gartner (US). "The more emotional the interaction, the more you want someone to hold your hand," she says. Amuso advises analysing your customers and the types of interactions they require before deciding whether and what to automate. Web or phone self-service, or automatic e-mail response technology may make sense for low-value clients, whereas companies probably will want to avoid such automation for their high-value customers, she says. "E-mail can cost as much as $40 to answer [personally]," she says. "If you're fully automated, it can cost less but you may miss something in the interaction."

The type of information that customers are seeking also matters. IVR, for example, is highly appropriate for customers who want to check simple facts, such as account balances or flight arrival times. But the more complicated the query, the riskier it is to use.

Dell Computer puts a lot of thought into deciding when automation makes sense, and when it doesn't. The company won't use IVR to walk callers through computer problems but does use it for call routing. An automated attendant asks callers to punch in their express service code, which identifies the type of system they own, so the call can be routed to the best-trained available agent. When you're helping customers deal with thorny computer problems, there's "limited application for taking a human out of the equation", says Mike Jackson, Dell's director of consumer technical support.

For customers with relatively simple problems, Web self-service works well. More than half of Dell's customers needing help opt for Web self-service, which lets them tap into the same tools and knowledge bases that Dell agents use to help customers. By asking customers to type in their computer's unique identification number, Dell can serve up content that's specific to that system. For Dell, Web self-service lets customers get answers faster and allows Dell agents to focus on handling the more complex problems.

Even if your business model does justify the use of IVR technology, don't assume it will run on autopilot. "Given the volume of calls in self-service applications, many organisations will not know if calls are being blocked, dropped, misrouted or queued for an unacceptable period - until it's too late," says Thomas Phelps, a manager in the technology security practice of PricewaterhouseCoopers (US). "Organisations may not know until hours or days later that customers received busy signals or were routed incorrectly, or that the wrong prompts or applications were playing." Phelps recommends that companies employ testing services (such as those offered by Empirix) that automatically dial into the call centre to make sure that all is well or to sound the alarm if it isn't.

Cross-Selling: A Whole New Ball Game

As CRM pushes companies to cast aside their product-centric mentalities in favour of customer-centric operations, life gets more complicated for call centre agents. When companies organised themselves around their product lines, agents just had to know a small set of products cold; now agents need to be familiar with anything a customer might want in order to effectively cross-sell or up-sell. It's not unusual for agents using CRM software to be expected to handle 20 or 30 different products, says Jon Anton, co-founder and director of benchmark research at Purdue University's Centre for Customer-Driven Quality. As the job evolves from script-reader to knowledge worker and salesperson, companies need to make sure their agents have the right skills - and attitude - to fit the new job description. And that's a matter of properly training and rewarding them. "Most telemarketing agents sound like robots because they're just paid by the hour," says Lindsey Higgs, an analyst with AMR Research in Boston. "They [couldn't] care less if they sell anything because they're not getting anything out of it."

Transforming order-takers into salespeople can increase corporate revenues. At Hilton Hotels, for example, agents don't simply take reservations. If no rooms are available at the hotel the customer requests, agents try to cross-sell another of Hilton's six brands in the same city. "Selling takes a more sophisticated skill mix than order-taking," says CIO Tim Harvey. "Agents have to really understand unique brand characteristics and how to drive out the best price possible." The company has invested more in training and gives agents the extra time they need on the phone to make the sale - at a cost of about one cent a second. But the investment appears to be paying off. According to Bala Subramanian, senior vice president of brand integration and CRM, cross-selling through the call centre is generating $US250 million of incremental revenue across Hilton's brands annually.

Likewise, at international shipper DHL Worldwide, Mike Sears, vice president of customer service, is pushing the call centres to focus on customer service and sales instead of customer service and order-taking. That means hiring people with stronger sales backgrounds and giving all agents training in how to sell DHL. If a customer asks: "Do you ship to Manila?" agents are taught not just to say yes, but to add that DHL is the fastest to Manila with 99 per cent on-time arrival. Managers are now less concerned with how quickly agents talk with customers than with how well they sell DHL. As of October, DHL was converting about 55 per cent of calls to sales, up from 51 per cent the previous year.

Overcoming the Sweatshop Culture

The average turnover rate for US call centres according to Anton's research, is 38 per cent annually; almost a third of companies report turnover of more than 100 per cent. "Agents either go someplace else for a 25 cents an hour raise, or go to another industry altogether," says Gartner's Amuso. "The majority leave because they hate it." With abysmal pay, constant monitoring and high stress, there's not much reason to stick around - or to do a good job. "If the average call centre agent makes only $25,000, you're only getting $25,000 worth of service," says Higgs. "Is that really the face you want to show customers?"

Although call centres are often referred to as white-collar sweatshops, a few forward-thinking companies - most in financial services, high-tech manufacturing and insurance - have managed to keep their turnover rates under 10 per cent. "They've recognised that it's dangerous to put the highest levels of customer contact in the hands of the least trained, lowest paid people," says ICMI's Cleveland. "They've built a culture around giving these positions the importance they really deserve. These are places people want to work." Keeping turnover low not only helps companies provide consistent service, it's also better for the bottom line, since it costs $6000 on average in the US to hire and train a new agent, says Anton. For highly skilled agents, such as brokers, that cost can reach $20,000.

At Telvista, a contact centre outsourcer based in Dallas, each call centre has a resident career coach who meets with agents to discuss their career paths after they've been on the job for 30 days. Telvista provides customer support for many high-tech clients, so it offers courses to help agents prepare for certification exams that will qualify them to handle increasingly complex technologies - and earn a raise. Agents are given time at work to prepare for the exams and can study from home through an online university. Although the company won't disclose turnover statistics, executive director of professional services Mary Jo Lichtenberg says that the coaching and training program has been "very effective" in helping Telvista retain employees, keeping the company's turnover lower than average.

"The environment within a call centre can be quite stressful," says Orla O'Regan, senior contact centre manager for Digifone, Ireland's second largest mobile phone operator. "Everything agents do is monitored to some extent. That can be quite off-putting."

Digifone uses Performix Technologies' Emvolve Performance Manager to give agents real-time feedback on their progress toward performance objectives. Since bonuses depend on meeting their objectives, agents like knowing where they stand. "They're very much in control of how much they earn," says O'Regan. "It's given staff something tangible to aim for." Within a month of rolling out Emvolve in February 2000, agent productivity jumped 15 per cent and efficiency increased 6 per cent.

Although you can't get away from monitoring in call centres, Big Brother tactics are counterproductive. "A lot of call centres monitor to catch agents doing something wrong. We monitor to catch them doing things right," says Lichtenberg. Telvista uses monitoring and just-in-time training tools from Georgia-based Witness Systems. The software randomly records voice and screen data for five calls per day for each agent. Supervisors can hear the conversation and see how agents are using desktop tools and entering data into clients' CRM systems. If an agent falls below the standard for, say, putting a caller on hold on three consecutively monitored calls, an interactive e-learning module can be sent to a folder on the agent's desktop. Lichtenberg says that quality scores increased on the accounts whose agents use the software.

Giving agents the proper tools also goes a long way toward reducing turnover. By providing them with one-click access to information from multiple systems through Epiphany's Octane software, DHL reduced the average call-resolution time from 125 hours to 95 hours - a 24 per cent improvement. Hence, call centre turnover fell by about 10 per cent - from 29 per cent in 2000 to 26 per cent as of August 2001. "Agents abhor being caught flat-footed and not able to explain something to the customer," says Sears. "Now we're able to tell customers up front what the story is."

Another strategy for minimising the sweatshop environment of call centres is to banish the physical call centre altogether. Outsourcers operate virtual call centres, where agents work from their homes using Web-based software that links to clients' systems. Because they are spared the hassles of commuting and working in a cube farm, and can set their own hours, agents tend to be more satisfied with their job and provide better service. Steve Rockwood, co-founder and president of Colorado-based Alpine Access, says that by eliminating the barrier of geography, he can find agents who closely match clients' ideal customer profile.

Whether companies outsource their call centres to virtual operations - or even overseas - or operate state-of-the-art contact centres in-house, one thing is certain: customers must get their needs met whenever those needs arise. "Accessibility is now a feature for which [people] shop - and could well be the new battleground," says Purdue's Anton. "If you're not there when I need you, I'll buy someone else's product."

G'day Mate How Can I Help You

How do Australian call centre costs and statistics compare to the US experience?

What is the average yearly income of a call centre employee?

A recent survey conducted by Telus indicated that the average yearly income for a call centre employee is $30,000 - $34,999. This is supported by the Australian Institute of Management National Salary Survey update in 2001 that states call centre representatives' salary per annum, including leave loading, averages $32,201.

What is the average turnover rate of staff in a call centre?

The current staff turnover rate in the Australian call and contact centre industry is believed to be around 22 per cent. This rate varies between the different industry sectors, call centre size, environment and location.

What is the percentage of companies that would have a 100+ per cent turnover rate of staff?

In our experience we have never come across a call or contact centre who has (or has admitted) to having a turnover rate of 100 per cent or more.

What would the average cost be to hire and train a call centre employee?

In talking to call and contact centre managers, we have found the basic cost of recruiting and training new staff varies considerably. This all depends on whether the organisation outsources all or part of the recruitment and training of personnel. The general cost to replace a call centre employee is believed to be between $11,000 and $12,000.

What would the average cost be to hire a skilled call centre employee?

When using an external recruitment supplier the cost of hiring a skilled call centre employee ranges between $1500 and $5000. This, however, is dependent on the skills required, the role they are entering and previous experience.

Information supplied by Paul Smith, managing director for call and contact centre industry recruitment and training specialist TelusThe Self-Service Myth Offering self-service on the Web decreases telephone agents' workload, right?

Not necessarily. According to an April 2001 Incoming Calls Management Institute study, workload actually increased for 57 per cent of contact centres with self-service Web sites; workload also increased for 65 per cent of centres with e-mail and for 65 per cent of those using interactive voice response technology. In studying four financial services institutions' contact centre operations, James Watson, CEO of Doculabs, a Chicago industry analyst and consulting company, observed that Web self-service not only failed to decrease call volume, it also increased the complexity of calls. He maintains that having humans answering complex calls is, in fact, a good thing - as long as companies can route calls to agents who've been trained to handle them. "Corporations welcome tough questions; it's a chance to demonstrate that they're on it," Watson explains. "But you'll frustrate customers if you don't have the right people [taking the calls]."

The Pros and Cons of Long Distance

Moving your call centre overseas might be the right answer - but think before you act The labour pool in India is a call centre outsourcer's dream: college graduates are willing and eager to work for just $6000 to $11,000 a year. But Art Flew, president of US-based Msource, insists that quality was his motivation for building call centres in India. "It was the only place we could find university-level people with good command of the English language and where [handling calls] was seen as a profession or a career. We can get the right attitude," he says. "First we attack the quality problem, then deliver cost savings." But the savings can be significant. Despite greater telecom expenses to route calls to India, (Msource has redundant networks and two undersea cables), the favourable labour costs mean that the company's clients achieve savings of at least 30 per cent and sometimes much more, according to Flew. The time zone differential also lets companies hand off support to India after 5pm for round-the-clock coverage.

But won't customers notice a difference when talking to an agent overseas? In fact, customers tend not to notice accents as long as their questions are answered, according to Venkat Tadanki, vice president of sales and marketing for Daksh eServices, which operates contact centres in India. If the agent fumbles the answer, then the caller is more likely to notice an accent. Nonetheless, every Msource agent goes through a six-week training program that covers voice modulation (Indians tend to talk fast) and accent neutralisation.

But offshore outsourcing does bring some extra risks, says Colleen Amuso, a research director with Gartner. Infrastructure reliability and availability are two. And companies thinking of outsourcing need to be aware of labour conditions and hiring and training practices, which are much harder to monitor from half a world away, says Amuso. Managing training from afar can also be a challenge; for that reason, if product support information tends to change every month, outsourcing overseas could be problematic. "The more you can script, the easier it is," says Flew.

Despite the potential cost benefits, offshore call centre outsourcing hasn't caught on as fast as many thought it would, says Incoming Calls Management Institute President Brad Cleveland. "You often hear the analogy to manufacturing 20 or 30 years ago," he says. "But this isn't creating shoes." Cleveland thinks information associated with call centres changes too often for some companies to feel comfortable sending their customers' calls overseas.

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